Gupta Ltd. issued 1,000 equity shares of ₹100 each as fully paid-up, to the vendor, in consideration of the purchase of plant and machinery worth ₹1,00,000. Which of the following entry will be recorded in the company's journal for it?
Answer & explanation
Correct answer: option 4
The correct answer is Option (4) → Vendor A/c Dr. 1,00,000 To Share Capital A/c 1,00,000
Two entries are passed. When the plant and machinery is bought, the vendor becomes a creditor; when shares are allotted to him, that debt is paid off in shares instead of cash.
On purchase of the asset:
Plant and Machinery A/c Dr. 1,00,000
To Vendor A/c 1,00,000
On allotment of 1,000 shares of Rs. 100 each as fully paid (1,000 × Rs. 100 = Rs. 1,00,000):
Vendor A/c Dr. 1,00,000
To Share Capital A/c 1,00,000
No bank entry arises, because no cash changes hands at any point.
NCERT (2026-27 edition):
|
